Meet the People Trying to Put a Friendlier Face on Annuities

December 22, 2018 by
Ron Lieber

Saving for retirement requires a strange sort of oddsmaking.

On one hand, we’re somehow supposed to know what returns to expect from investments in our retirement accounts over the next 25 or 50 years.

And on the other, we must apply our prediction skills to related questions about how long we’ll want to work, how long we’ll be able to work, how long anyone will be willing to pay us to work and how long we’ll live.

It’s absurd to think that you can do this with any degree of accuracy.

And so we return to annuities, which at their simplest (as they should be) are a way to exchange some of your hard-earned money for regular checks that will keep coming until you die. It’s a guarantee, in other words, that at least some of your money will not be subject to an extended stock market rout, and that you can count on predictable income on top of whatever you receive from Social Security.

Lots of gunslinger sales types would happily sell you complex products with high fees and commissions over steak dinner sales pitches (and ask for more of your net worth than they should). This is a column, however, about more sober-minded individuals who mostly want you to consider annuities as an asset class, something you have in addition to stocks and bonds. To them, annuities are pension replacements to help people sleep better at night.